3.1 EPA Regulatory Development Process

EPAs regulatory development process
(outlined in Figure 3-1) is designed to ensure that all
statutory and administrative requirements for rulemaking are met.
The process is also intended to
allow for all EPA offices and regions with an interest in a rule to
participate in development of and to
approve of that rule.

The Agencys Regulatory Policy Council (RPC) is responsible for
overseeing the Agencys regulatory development process and ensuring
that the process conforms with Administration policy and addresses cross-cutting
analytical issues. The RPC also monitors the system to identify and
implement any needed changes.

3 Regulatory
Development

The regulatory development process is
initiated by the semi-annual submission of anticipated regulatory
actions for tiering assignment by senior Agency staff. Each regulatory
action is assigned one of three tiers:

Tier 1: Administrators Priority ActionsInvolves
the few top actions that demand ongoing involvement of the Administrator
and extensive involvement of Assistant Administrators (AAs) and Regional
Administrators (RAs) across the Agency.

Tier 3: Lead-Office DelegationActions with little or no need
for cross-Agency participation.

This tiering process both prioritizes actions in terms of their potential
for large and multimedia effects and ensures early involvement of key
Agency personnel. The formal regulatory process outlined in Figure 3-1
and discussed below is required of all Tier 1 and Tier 2 actions. Tier
3 actions are dealt with less formally but can involve many or all of
the procedural steps outlined here. While the tiering process imposes
a hierarchy for Agency actions, there is no direct relationship between
the tiering process and the designation of significant regulatory
actions for OMB purposes ( Browner, 1994).

3.1.1 Start
Action Notice

Once the regulatory action has been assigned a tier, a Start Action
Notice (SAN) is prepared by the lead AA/RA and is distributed to all
AA and RA offices across the Agency. This notice serves to solicit workgroup
membership and other input from offices across the Agency.

3.1.2 Workgroup
Formation

After the SAN is approved by the RPC, the Agency workgroup is officially
formed. The Agency workgroup is an EPA-wide, staff-level group formed
to develop a regulatory action and supporting materials. The workgroup's
primary responsibilities are to

identify and assess principal policy issues and options;

conduct technical and analytical work, including risk assessment
work and economic analysis;

resolve issues or elevate them for upper management resolution;
and

ensure the quality and completeness of regulatory packages, including
the Federal Register (FR) notice.

Workgroup members are expected to represent the policy positions and
perspectives of their management as well as to contribute their technical
and analytic expertise.

During the regulatory development process, one of the key responsibilities
of each workgroup member, including the economist, is to communicate
key issues and results to workgroup members and senior management. Without
proper interpretation and communication of results from the economic
analysis, decisions might be made without proper understanding of the
rule's economic implications. For more discussion on methods to communicate
analytical results more effectively, see Section 9 of this document.

3.1.3 Early
Guidance from Senior Management

Early involvement by senior management is one of the hallmark objectives
of the 1994 reforms to the EPA regulatory development process. The purpose
is to clarify, for the workgroup, the objectives of the rulemaking and
to identify the issues of significant concern to senior management.

3.1.4 Analytical
Blueprint

Consistent with the goal of having all regulatory actions be based
on sound science, an analytical blueprint is prepared to guide all forms
of analysis throughout the processeconomic, scientific, legal,
and institutional. The blueprint outlines the scope of the action
and requirements for analysis. The blueprint is considered a living
document so that the analysis plan can be modified if the situation
warrants.

Once the blueprint is prepared, it is distributed to senior management
across the Agency for review and approval. The workgroup may need to
revise the blueprint based on cross-Agency review. The level and extent
of review may differ slightly between Tier 1 and Tier 2 actions.

In these stages, the workgroup analyzes and evaluates regulatory options
to narrow the scope of regulatory alternatives considered and then selects
the regulatory alternative from among the group of alternatives. This
process is typically iterative, with the elimination of some alternatives,
possible addition of others, and ultimate selection of a final proposed
alternative. Senior management approval is an essential part of the
iterative process. Senior managers must accept that the options development
process and final selection are based on sound analysis of the alternatives.

The analysis/options development/selection process is the venue in
which solid economic (and other) analysis can make substantial contributions
to the rulemaking process. The lead economic analyst's responsibility
is to ensure that the economic analyses are technically strong and that
the results of the analysis are communicated effectively to workgroup
members and senior management to help inform their decisions.

3.1.6 Rule
Preparation and Workgroup Closure

Once the analyses have been performed and the regulatory alternative
selected, the workgroup must prepare the regulatory package for subsequent
review and approval. The regulatory package includes the FR
notice for the proposed rule and all supporting documentation.

The workgroup closure meeting occurs when the workgroup has prepared
the regulatory package and the management of the lead office has approved
the notice and analyses. The purpose of the workgroup closure meeting
is to confirm that

the workgroup has successfully completed its job, resolving as many
issues as possible and clearly defining others;

the rulemaking package is ready for review at the AA, RA, and Deputy
Administrator levels; and

Agency and external requirements have been met.

Members of the workgroup participate in the workgroup closure meeting
as representatives of their AA/RA. Therefore, positions presented should
be approved by the respective AA/RA prior to the meeting. Although OAQPS
workgroup members attend the meeting, issues within OAQPS and Office
of Air and Radiation (OAR) are not the focus of the meeting, because
these issues will have been addressed prior to the meeting as a condition
of package approval by the Office Director and the AA. Instead, the
focus is on input provided by the workgroup members from other EPA offices
or regions.

3.1.7 OMB
Review

The period for OMB review is 90 days for a proposed rule and 45 days
for a final rule if no material changes have been made since proposal;
OMB can, however, extend this period when it needs more time or when
issues are unresolved. In virtually all cases, rules do not go forward
for final signature in EPA until the program office addresses OMB concerns
and resolves outstanding issues. Court-ordered deadlines and stringent
statutory deadlines may occasionally require that EPA publish a rule
before OMB has finished its analysis and comment or be given less time
to review.

Once workgroup closure has been attained and the package has been cleared
for submittal by the Administrator's office, the package is sent to
OMB's Office of Information and Regulatory Affairs (OIRA) for review.
Under EO 12866, each proposed significant regulatory action that the
Agency issues must be sent to OMB for review before it is signed by
the Administrator. Again, the determination of significance for OMB
purposes is not directly related to EPA's tiering hierarchy. OIRA and
the Agency will have determined in advance whether a rule is deemed
significant. The purpose of OMB review is to ensure that the Agency's
regulatory actions "are consistent with applicable law, the President's
priorities, and the principles set forth in [Executive Order 12866]
and do not conflict with the policies or actions of another agency"
[EO 12866, Section 6(a)(4)].

Rules not considered significant can go straight to the Administrator
for signature and FR publication without OMB review.

3.1.8 Administrators
Signature and FR Publication of Proposed Rule

Recommended changes in the rule brought forth by OMBs review
must generally be addressed by the Agency before the rule can go forward.
Once these issues are addressed, the proposed rule is ready for
the Administrators signature. Once obtained, the signed
rule is forwarded to the Agencys FR liaison for final review
and submission to the FR for publication.

3.1.9 Public
Comment, Rule Revision, and Signature and Publication of Proposed Rule

Publication of the proposed rule is followed by a public comment period,
typically lasting 60 days, in which any interested party has the opportunity
to comment on the proposed rule or the supporting analyses.

3.1.10 Rule
Revision, Signature, and Publication of the Final Rule

After the public comment period closes, the workgroup is reconvened
to review and respond to the public comments and to prepare the final
rule. The process for development of the final rule is the same
as for the proposed rule: analysis, senior management review,
workgroup closure, OMB review, Administrators signature, and publication
in the FR.

___________________

1 For more detail on EPA's
regulatory development process, see Browner, Carol M.
Memorandum on Initiation of EPA's Regulatory and Policy
Development Process. U.S. Environmental Protection Agency,
Office of the Administrator. July 1, 1994.

2 See Section 2 of this guidance
document for further discussion of E.O. 12866 and OMB review.